FSaaS: Challenges for 'Free Software as a Service' in business

Of all the Free Software business models, Software-as-a-Service (SaaS) is one of the most appealing. Wordpresss blazed a path over a decade ago that few have managed to follow. How do Free Software businesses of this nature work? What are their biggest challenges? And why aren't there more of them? Bring your ideas for a discussion.